Tax Guide for Traders
Free online guide
Top page in our tax guide for traders.
People who do a lot of short-term trading may qualify as traders under the tax law. If you meet the relevant tests, you'll receive somewhat different — and more favorable — tax treatment. This part of our web site provides guidance that will help you decide whether you qualify as a trader, and understand the tax rules that apply if you meet the tests.
To learn more: Our book, Capital Gain, Minimal Taxes, includes six chapters dealing specifically with income taxation of traders.
Introduction
A one-page overview of our Tax Guide for Traders.
Benefits of
Trader Status
Here's what you gain if you qualify as a trader.
The Disturbing
State of the Law
There's no clear definition of trader. And that's just part of
the problem.
Definition of
"Trader"
To be a trader you have to meet the two requirements described on this
page.
Filing as a
Trader
What does a trader's tax return look like?
IRS Guidance on
Trader Taxation
The IRS has produced a limited amount of (mostly accurate) guidance on
trader taxation.
Mark-to-Market
Accounting
If you're a trader, you should consider whether you can benefit from the
mark-to-market election.
Identifying
Investment Holdings
Before you make the mark-to-market election, you need to think about
identifying investment holdings.
Making the
Mark-to-Market Election (part 1)
There are two parts to making the election. This is the first part.
Making the
Mark-to-Market Election (part 2)
Your election may not be considered valid if you fail to follow through
with the second part of the election.
Section 481(a)
Adjustment
An explanation of the adjustment you have to make when you switch to
mark-to-market accounting.
